The owner of failed property lender Structured Finance said he felt a moral obligation to pay cash to minority investors, in preference to the defunct Money Managers First Step funds.

Structured Finance, owned by interests associated with Auckland financier Martyn Reesby, owed debenture investors about $32.7 million after defaulting on its debts in May 2009, joining a long list of failed property-related finance companies.

Most of the money - about $29.4m - was owed to First Step, the flagship income-producing investment product of Money Managers, which was frozen in late 2006 owing investors the better part of $460m, with the remainder owed to individual small debenture investors represented by trustee Foundation.

According to Structured Finance's prospectus, stock held by minority investors and First Step had an equal claim on Structured's assets, but while Foundation investors got 25 cents in the dollar for their debentures, First Step debenture stock has been converted into new debentures worth just 8.6c.

After agreeing to pay the Foundation investors 25c in the dollar last month in a deal excluding First Step, Reesby said it was the right thing to do.

"I considerably overpaid the public debenture holders," he said. "It was a moral thing from my perspective and it's really that simple."

The trustee for the First Step investors, Sydney-based Calibre Asset Services, had allowed the preferential payment, he said.

"Calibre didn't stand in my way to do so. They thought the right thing to do was to let me do that."

Under a moratorium agreement that should have returned 60c in the dollar, all debenture stock was to be paid back by October 31 this year. But it appears First Step investors may now have to wait until late 2015 - some nine years after First Step was closed - to get the last of their much-reduced funds paid to them.

First Step's stock is dated to mature in 2015.

Edward Russell of Calibre said 8.6c represented the current valuation of Structured's remaining assets.

The conversion "doesn't change anything from Calibre's perspective, as any funds recovered by SFL in excess of the 8.6c are shared pro rata with the debenture holders", he said.

No agreement had been reached with Reesby, but discussions were ongoing.

"We are hopeful that we may come to some agreement with [Reesby's company] Paradise for it to also buy Calibre's stock."

Reesby, when asked whether the debenture deal meant First Step could receive a maximum of 8.6c in the dollar, said: "Correct."

The differential deal was fair because First Step funds had been investors since 2000, seven years earlier than the others.